Correlation Between Amcap Fund and American Funds
Can any of the company-specific risk be diversified away by investing in both Amcap Fund and American Funds at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Amcap Fund and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amcap Fund Class and American Funds Strategic, you can compare the effects of market volatilities on Amcap Fund and American Funds and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Amcap Fund with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and American Funds.
Diversification Opportunities for Amcap Fund and American Funds
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amcap and American is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and American Funds Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Strategic and Amcap Fund is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Amcap Fund Class are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Strategic has no effect on the direction of Amcap Fund i.e., Amcap Fund and American Funds go up and down completely randomly.
Pair Corralation between Amcap Fund and American Funds
Assuming the 90 days horizon Amcap Fund Class is expected to generate 3.02 times more return on investment than American Funds. However, Amcap Fund is 3.02 times more volatile than American Funds Strategic. It trades about 0.08 of its potential returns per unit of risk. American Funds Strategic is currently generating about -0.18 per unit of risk. If you would invest 3,572 in Amcap Fund Class on August 24, 2024 and sell it today you would earn a total of 59.00 from holding Amcap Fund Class or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Amcap Fund Class vs. American Funds Strategic
Performance |
| Timeline |
| Amcap Fund Class |
| American Funds Strategic |
Amcap Fund and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcap Fund and American Funds
The main advantage of trading using opposite Amcap Fund and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund position performs unexpectedly, American Funds can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American Funds will offset losses from the drop in American Funds' long position.| Amcap Fund vs. Aqr Large Cap | Amcap Fund vs. T Rowe Price | Amcap Fund vs. Touchstone Large Cap | Amcap Fund vs. Alternative Asset Allocation |
| American Funds vs. Rational Strategic Allocation | American Funds vs. T Rowe Price | American Funds vs. Legg Mason Bw | American Funds vs. Touchstone Large Cap |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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